New Delhi: The Supreme Court has held that the bar under Section 96(3) of the Code of Civil Procedure, 1908, read with Order XXIII Rules 3 and 3A, applies only to parties to a compromise, and that a person who was neither a party to the suit nor to the compromise can seek leave to appeal against a consent decree if it prejudicially affects his independent legal interest.
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran dismissed the appeals of Girishbhai Natwarlal Patel against the Gujarat High Court’s orders of 02.04.2024 and 14.08.2024, which had granted an ex parte ad interim injunction against him, condoned an 11-year delay and granted leave to Gautam Punjabhai Palkhiwala (since deceased, through legal representatives) and eight others to appeal against a consent decree dated 29.04.2013 in Original Civil Suit No. 322 of 2012.
That suit was filed by Geetagram Cooperative Housing Society for specific performance of an agreement to sell dated 11.09.1996 executed by the heirs of the original owner, Purshottambhai Punjabhai. It ended in a compromise decree, which was put in execution in 2020, and a Court Commissioner executed a sale deed on 18.06.2022 in favour of Mr. Patel. The Palkhiwala respondents, members of the Punjalal Mohanbhai HUF, claimed under a registered sale deed dated 29.08.1975 by the same owner to their predecessor, Vikram Punja Palkhiwala. They alleged that the decree was the product of fraud and collusion, and that Mr. Patel, said to have been Chairman of the Society in 2002-2003 and the heirs’ attorney, was the real beneficiary.
Senior Advocate Anshin H. Desai argued for the appellant that no appeal lies against a consent decree, relying on Pushpa Devi Bhagat v. Rajinder Singh, Triloki Nath Singh v. Anirudh Singh and R. Janakiammal v. S.K. Kumarasamy, that the injunction was granted on a mere draft amendment against a non-party, and that delay of 11 years was condoned mechanically. Senior Advocate Mihir J. Thakore, with Ms. Megha Jani, defended the orders.
Rejecting the first argument, the Court held that the statutory bar rests on the binding effect of the compromise between its parties and “cannot be mechanically invoked to defeat the right of a person who was not a party to the compromise and who asserts an independent legal interest prejudicially affected by the decree.” It explained that the statement in Pushpa Devi that no appeal lies against a consent decree relates only to those who were parties to the compromise. Triloki Nath was distinguished because the appellant there claimed title through a party to the suit and was bound by the compromise.
“A stranger to a compromise decree cannot be said to be barred under Section 96(3) read Order XXIII Rule 3 & Rule 3A of the CPC, 1908, since the scope and import of these provisions are limited to the parties to the compromise and act as an estoppel only with respect to them.”
At the same time, the Court cautioned that non-party status gives no unrestricted right of appeal. Leave is to be tested by the usual principles, drawn from V.N. Krishna Murthy v. Ravikumar and H. Anjanappa v. A. Prabhakar: the applicant must be a “person aggrieved” whose right is prejudicially affected, and not one who suffers a psychological, remote or indirect injury. The consent character of the decree neither dispenses with that requirement nor imposes a stricter test.
Applying this, the Court noted that the 1975 sale deed was undisputed, that mutation entries do not confer title but the material could not be dismissed as showing a remote or imaginary interest, and that the decree was executed only in 2020 with the sale deed following in 2022. It also took note of the alleged power of attorney of 22.03.2012 in the appellant’s favour and of the non-appearance of the Society and the original defendants before the High Court and the Supreme Court. These circumstances “do not, by themselves, establish fraud or collusion”, but showed the grievance was not so tenuous as to shut out the appellate process.
On the injunction, the Court held that the High Court rightly protected the land. Both sides were strangers to the suit, and the impleadment application could be heard only after leave was decided, by which time the land might have been alienated or encumbered. The injunction was also not an automatic perpetuation of the ex parte order, because the appellant was heard before it was confirmed on 14.08.2024.
On delay, the Court observed that the mere computation of 11 years from 29.04.2013 is not a complete answer, since strangers to a decree cannot be presumed to know of it from the date it was passed. The respondents claimed to have learnt of the change in revenue records in 2023 and received RTI documents on 21.03.2024, which gave an explanation. The Court held the condonation merely permits the issues to be examined in appeal.
The Court stressed that its conclusions on the injunction, standing and delay are confined to those questions and are not an opinion on the merits of the title claims or the fraud and collusion allegations. Dismissing the appeals, it requested the High Court to hear and decide the main appeal within three months.
Appearances:
For the Appellant: Mr. Anshin H. Desai, Senior Counsel.
For Respondent Nos. 1 to 9: Mr. Mihir J. Thakore, Senior Counsel, and Ms. Megha Jani, Counsel.
Case Title: Girishbhai Natwarlal Patel vs. Gautam Punjabhai Palkhiwala (Dead) by LRs & Ors., Civil Appeal Nos. 14017-14018 of 2026, 2026 INSC 1177
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